Tag Archives: lawful assignment

Michigan Court Finds Plaintiff’s Claim that Foreclosure Proceedings Violated Mich. Comp. Laws §§ 600.3204(1) and (3) Unpersuasive

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The court in deciding Anderson v. Bank of Am., N.A., 2013 U.S. Dist. LEXIS 152765 (E.D. Mich. Oct. 24, 2013) dismissed plaintiff’s claims that foreclosure violated Michigan state law.

Plaintiff sought a declaratory judgment that foreclosure proceedings violated Mich. Comp. Laws §§ 600.3204(1) and (3). The basis of plaintiff’s claim was a challenge to the assignment of the mortgage from MERS to defendant. Plaintiff alleged that this assignment was invalid. Ultimately, the court found this argument has no merit.

Plaintiff contended that defendant did not have standing to foreclose on the property because the assignment of the mortgage from MERS to defendant was invalid. Plaintiff argued that TBW was no longer in business at the time MERS assigned the mortgage to the defendant. Therefore, as the plaintiff reasoned, the assignment was invalid. Additionally, plaintiff complained that the assignment was “robo-signed” and that it was insufficient to create a record chain of title.

The court concluded that the plaintiff was wrong. The court noted that the Michigan Supreme Court had made clear that, under Michigan law, a mortgage granted to MERS as nominee for lender and lender’s successors and assigns was a valid and assignable mortgage.

Washington Court Denied the Plaintiff’s Motion for Preliminary Injunction

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The court in deciding Cameron v. Acceptance Capital Mortg. Corp., 2013 U.S. Dist. LEXIS 151134 (W.D. Wash. 2013) denied the plaintiff’s motion for preliminary injunction.

Nearly all of plaintiffs’ claims turn on a single question: whether, under Washington law, Flagstar had legal authority to appoint NWTS as successor trustee. Plaintiffs first asserted that Flagstar could not have become a beneficiary with the power to appoint a successor trustee. Plaintiff reasoned that under Washington state law, MERS was an unlawful initial beneficiary and thus lacked the power to assign its interest to Flagstar.

In their reply brief plaintiffs raised an additional claim alleging that even if Flagstar held the note, it had sold it to Fannie Mae before appointing NWTS as successor trustee, thus it shed its authority to make this appointment when it did so. Ultimately, the Court finds both arguments unpersuasive.

First, the court found that this case is distinguishable from the cited Washington state case law, as Flagstar derived its authority to enforce the note from its position as the note holder, not from its position as assigned beneficiary. The court found plaintiffs’ second allegation, were raised improperly only upon reply, was similarly unconvincing as it rests on a misunderstanding of the law.

Texas Court Finds Plaintiff’s “Split-the-Note” Theory Without Merit

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The court in deciding Morlock, L.L.C. v. JPMorgan Chase Bank, N.A., 2013 U.S. Dist. LEXIS 153386 (S.D. Tex. Oct. 25, 2013) ultimately dismissed plaintiff’s bifurcation theory based complaint.

Plaintiff alleged that the deed of trust had been “executed and delivered . . . to secure MERS” and that it “was allegedly assigned to defendant Chase by MERS.” Plaintiff further alleged, the deed of trust and assignment, although appearing valid on its face, was invalid and of no force or effect because, MERS was not the holder of the original note that was secured by the deed of trust.

Accordingly, the plaintiff argued, the assignment by MERS was not valid and defendant Chase was not the owner and holder of the note. Therefore, Chase had no right or authority to post the property for a trustee’s Sale.

Chase alleged that the plaintiff’s argument against the validity of the assignment came from the theory that the ‘bifurcation’ of the note and deed of trust renders the deed of trust invalid. Chase argued that Texas courts have rejected the “bifurcation theory” and that plaintiff had therefore failed to state a claim.

The court ultimately granted Chase’s Rule 12(b)(6) motion to dismiss and dismissed the action with prejudice.

Court Decides That Alleged Defects in Assignments Did not Give Rise to Claims Under the Washington Consumer Protection Act

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The court in deciding Babrauskas v. Paramount Equity Mortg., 2013 U.S. Dist. LEXIS 152561 (W.D. Wash. Oct. 23, 2013) dismissed the plaintiff’s complaint.

Plaintiff alleged that Paramount’s loan origination practices, MERS’ involvement in the original deed of trust, and the subsequent defects in assignments gave rise to claims under the Washington Consumer Protection Act (“CPA”) and/or the Washington Deed of Trust Act (“DTA”).

Plaintiff also asserted claims of fraud, breach of the covenant of good faith and fair dealing, and quiet title. Defendants sought dismissal of all of plaintiff’s claims under Rule 12(b)(6).

The court found that the plaintiff’s insistence that MERS’ involvement somehow strips subsequent holders of beneficiary status was simply incorrect. With regards to the representation regarding MERS’ status as beneficiary, the court found that the plaintiff had not alleged that he relied on that representation or that he suffered damages caused by MERS’ misrepresentation.

The court found that the plaintiff had not, therefore, asserted a viable cause of action under the CPA regarding the representation that MERS was the beneficiary. Further, the plaintiff’s claims under the DTA therefore failed as a matter of law. Plaintiff also had failed to allege facts that gave rise to a plausible claim that defendants could be liable for a breach of the covenant of good faith and fair dealing. Having failed to allege facts raising a plausible inference that plaintiff had satisfied the loan obligation or was otherwise entitled to free and clear title to the property, plaintiff’s quiet title claim was deemed defective.

Court Dismisses Plaintiff’s Wrongful Foreclosure, Fraud, Quiet Title and Declaratory Relief Claims

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The plaintiff in Cuddeback v. Bear Stearns Residential Mortg. Corp., 2013 U.S. Dist. LEXIS 152989 (W.D. Wash. Sept. 10, 2013) brought claims against Bear Stearns, EMC, Wells Fargo (collectively, “Defendants”) for wrongful foreclosure, fraud, quiet title and declaratory relief pursuant to Washington law. The plaintiff also sought damages arising from violations of the Real Estate and Settlement Procedures Act (“RESPA”), 12 U.S.C. § 2607, and the Truth in Lending Act (“TILA”), 15 U.S.C. § 1641(g).

Defendants filed a motion to dismiss plaintiff’s complaint pursuant to Fed. R. Civ. P. 12(b)(6). The court granted the defendants’ motion to dismiss as they found that plaintiff failed to state a claim for which relief could be granted.

California Court Finds That the Plaintiff’s Complaint Should be Dismissed as Defendant Owed no Fiduciary Duty

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The court in deciding Lawrence v. Sadek, 2013 U.S. Dist. LEXIS 153074 (C.D. Cal. Oct. 21, 2013) dismissed the plaintiff’s claims.

The plaintiff’s complaint alleged that defendant breached a fiduciary duty by allowing the plaintiff to enter the loan agreement knowing that she would default.

Plaintiff claimed, defendant owed her a fiduciary duty because Quick Loan, plaintiff’s lender, was a “client” of Peterson’s employer and co-defendant ETS Services. Peterson in response, argued that (1) she did not owe a fiduciary duty to plaintiff because neither she nor her employer ETS Services were parties to the loan transaction, and (2) even if she or her employer were parties to the transaction, lenders generally do not owe a fiduciary duty to borrowers.

Defendant Peterson filed a motion to dismiss pursuant to FRCP 12(b)(6). The Court held a hearing and after considering the parties’ arguments, the court found that the plaintiff’s claim should be dismissed because Peterson did not owe a fiduciary duty to plaintiff.

California Court Dismisses Plaintiffs Suit Brought for Wrongful Foreclosure Defendants Bank of America & Freddie Mac

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The court in deciding Bergman v. Bank of Am., N.A., 2013 U.S. Dist. LEXIS 153173 (N.D. Cal. Oct. 23, 2013) dismissed the plaintiff’s complaint.

Most of plaintiffs’ claims were based on one of two legal theories.

First, the plaintiffs based their arguments on the alleged sale of the DOT from Bank of America to the Securitized Trust, the plaintiffs argued that the sale divested Bank of America of its beneficial interest in the DOT. Plaintiff also alleged that because the DOT was never properly assigned, the Securitized Trust also did not hold the beneficial interest. They alleged that, accordingly, the true beneficiaries are the Securitized Trust’s certificate holders.

Second, the plaintiffs based their argument on the alleged involvement of PK Properties in illegal bid-rigging activities, including activities that allegedly tainted the trustee’s sale for the Property.

The court, after considering the arguments provided by the plaintiff, granted the defendants’ motion and dismissed the complaint.